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March 24, 2016

Skyborne Liens

While listening to the March 15 city council meeting I was surprised to learn that Council Member Betts had come to consider me such a worthy expert on financial assurance that he read my opinion that I wrote in 2008 on D.R. Horton's request to replace their bonds with a lien.

It's just too bad that Mr. Betts didn't read the relevant posting from Ron's Log. That would be this one from 2010 which deals with the arrangement that is currently in place. This is the deal with the current owners. The difference between the two offers is that the deal that is in effect requires the developer to get new bonds to get rid of the lien. Otherwise, they can do nothing. No one mentioned a provision like that in the 2008 offer from D.R. Horton.

Filed under Desert Hot Springs | permalink | March 24, 2016 at 08:50 PM


Ron, The city had the means to compel completion of the public improvements with the bonds in place. Nobody can compel a developer to build the houses. That is so basic it should not even need to be said. Whoever is confused by that distinction does not have even a remedial understanding of completion bonds.

Cities obtain bonds to insure completion of public improvements that will be dedicated to the city upon completion and to the city's specifications as approved by the city engineer. That would be things like curbs, gutters, paving, landscaping, perimeter walls, street lighting and more.

Those improvements are not now complete. The lien provides the city no means to complete them.

The city attorney at the time agreed with me the deal was a highly unusual arrangement, that it broke new ground as he put it. The present city attorney views it as unheard of, boneheaded.

You will not find a credible source with expertise in this area that says it was a proper move to release completion bonds and instead accept a lien. I've checked with plenty. You also won’t find city staff that agree. City staff at the time raised concerns and identified problems with the deal.

I've taken the time to educate myself on this issue and contrary to your opinion I am very much not in error on this one.

Posted by: Russ Betts at Mar 28, 2016 10:47:30 PM

You also continue to say that if there were bonds the city could use them to go in and "finish the project." It's this gross misunderstanding of financial assurance that will keep you on the wrong side of the facts until you grasp your error. It's been explained to you repeatedly by city staff, the city attorney and other council members over the years.

Posted by: Ron's Log at Mar 26, 2016 4:17:13 PM

I was correct both times, but you chose to read about a deal that does not exist, not the one that the city has to deal with now. It's called taking it out context.

Posted by: Ron's Log at Mar 25, 2016 6:55:55 AM

It does not make it any better of a deal. And when I think you are correct, I have no problem pointing it out.

Posted by: Russ Betts at Mar 24, 2016 11:20:58 PM

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